Ex-stein Roe Partner In Default

NEW YORK — John Giura, formerly a top partner in Stein Roe & Farnham, was declared in default Tuesday for failing to respond to government charges that he engineered an elaborate kickback conspiracy.

Giura, 53, of Oak Park, has already been convicted of criminal obstruction of justice and perjury charges related to the Securities and Exchange Commission allegations. He was sentenced last July to five years`

probation and fined $100,000.

Giura had been Stein Roe`s pension investment specialist before his arrest on the criminal charges stemming from making false statements to the SEC and coaxing others to give false testimony. He had headed a team of money managers that controlled $1 billion in clients` funds, including the investments of several Teamsters union pension funds in upstate New York.

The SEC hearing against Giura and three former stockbrokers in the Utica, N.Y, office of Shearson Lehman Brothers Inc. got underway Tuesday. SEC Administrative Law Judge Jerome Soffer declared Giura in default for failing to stipulate to the charges or appear at the hearing.

If the SEC issues such a default order, all SEC charges against Giura would be deemed true and he could be barred from participating in the securities industry.

``John Giura has elected not to participate at this time,`` said Henry Putzel, one of his attorneys. ``He has made a settlement offer which was rejected by the SEC.``

Barbara Manning, SEC assistant regional administrator in charge of the Giura case, confirmed that Giura`s offer to settle the charges against him had been rejected by the SEC three weeks ago because the settlement would have resulted only in a partial barring of Giura from the investment advisory business.

In opening arguments Tuesday, Manning contended Giura was the central figure in an elaborate conspiracy that involved ``greed, fraud and breach of fiduciary duty.``

Specifically, Giura was charged with engaging in elaborate bribery schemes. As part of that, an illegal holding account, the ``Stein Roe General Account,`` was established at Shearson`s Utica office.

Shearson brokers John and George Inserra, who handled much of the Teamsters brokerage business at Giura`s direction, are charged with buying securities in that account. If the stock price went up, the SEC alleges they then transferred the stock to their retail accounts. If the price went down, they then allegedly transferred it to the Teamsters` accounts.

``turned a blind eye to this holding account fraud. He allowed this fraud to occur rather than challenging his big producers,`` Manning said Tuesday.

Neal Goldman, attorney for the Inserra brothers, argued Tuesday that the SEC`s charges are a ``novella to justify their three-year investigation and the spending of a substantial part of the SEC budget.`` In view of Giura`s absence from the proceedings, Goldman said, ``There`s no issue on which to receive evidence. They are just slinging mud to see what sticks. The first element of a conspiracy is an agreement. There is no evidence of an agreement.``

Manning argued that the SEC views the relationships among Giura, the Inserras and Gentile as interwoven. ``Unless these interrelationships are understood,`` she said, ``the full picture of the Inserras` role in getting new advisory clients (for Stein Roe) won`t be illustrated.``

It is crucial to understanding ``how and why John Giura allowed George and John Inserra to use the Teamsters account as a dumping ground,`` she said. John Inserra spent more than five hours on the witness stand Tuesday. He testified that the Stein Row General Account was initially set up ``because Shearson and the block trading people advised us to do this.`` He later said the account was opened because ``John Giura would buy stock and he would tell my brother where he wanted the stock allocated.``

John Inserra also testified that he personally would buy stock in the Stein Roe General Account without having a specific customer in mind. ``Why would you order a transaction if you had no customer?`` asked Judge Soffer.

``That`s why I`m in trouble right now,`` Inserra replied. ``I would order a block of stock`` in the Stein Row account ``and then I would work it--try to sell it to my customers to earn commissions.``

He said when his brother, George, learned how he was using the account,

``he told me, `You`re nuts.` `` Asked if he used the Stein Roe account as a holding account for stock, John Inserra replied, ``No, I would say I inventoried it. I had a place to put a block of stock, keep it there and work it. The Stein Roe General Account was a computer entry. It was a nothing.``